An extension of the Federal Empowerment Zone (FEZ) tax credit has been approved for 2017. The renewed incentive is retroactive, meaning that businesses qualify if, in 2017, they employed eligible individuals and claim the federal income tax credit in a timely manner. If a business qualifies, any credit that would have been earned over the course of 2017 may be claimed now when filing the federal income tax return.
What is the Federal Empowerment Zone Tax Credit?
Federal Empowerment Zones are defined by the federal government, and are typically highly distressed communities, whether urban or rural. Companies located within the boundary of an Empowerment Zone and employ residents of the same Zone are eligible for benefits.
Details: A credit of 20% of the first $15,000 in wages each year for qualified employees. This credit is limited to $3,000 per employee per year and may be carried back one year and carried forward for 20 years. Retroactive credits are available for open tax years. There are no requirements for net new jobs, benefits coverage, employee certification, percentage of minimum wage, and business application. Employees may be either full-time or part-time, and minimum employment is 90 days. If participating in the WOTC Program, this credit may also be claimed in addition to that credit with adjustments for wages used when calculating the WOTC benefits.